tv Bloomberg Markets Americas Bloomberg January 11, 2018 12:00pm-1:00pm EST
known as fisa that gives the government authority to review american communications with suspected terrorists overseas. today it was called controversial and president said it may have been monitored to monitor his campaign. eliminatingveiled affordable plastic waste. leaving the european union will not lower standards and all existing eu regulations will be incorporated into u.k. law. european union foreign minister nucleart limiting ambitions must be preserved. eu foreign-policy chain that the eu is working and committed to make sure it is implemented. brussels and talks in
with germany and iran. -- the two inch inflation inflation pressures, wholesale prices fell last month. .he index was down 1/10 of 1% one big reason was because of oil prices. we'll get a look at inflation tomorrow. global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. bloomberg. york, and in in new am shery ahn. >> and i am vonnie quinn, welcome to bloomberg markets. ♪ julia: here are the top stories that we are following. buyers resurface after
tenure options. u.s.econd-most expensive city to live in is getting a little cheaper. we will discuss what is driving a drop in apartment rents. bloomberg reporting that the ridesharing company, ober, was keeping authorities in the dark. marty tells this hour. for now, julie hyman is with us. alice before yesterday, when we had deposits, trading higher, and the dow was at a record. closing basis. we have seen a gain in energy stocks. aree see today, oil prices at their highest since december of 2014 in new york trading. date, look at year to
energy is the best performer after being the worst performer in 2017. also some of the gains -- even though it is the best performer today, it's still travails oil. wti, that is the pink line. thathen you have the xle tracks energy stocks. you see the gap between them. they still potentially have some catching up to do. elsewhere today, we take a look at the homebuilders. of some tax adjustments, it ended up rising. industry, it'sg earnings beating estimates. revenues overall being the highest estimates. basis, and the
average home price according to wake of that strong earnings report, surging by 11%. much more modestly. julie hyman, thank you. yields are easing after china refutes that its officials recommended a slowing of u.s. treasuries to bloomberg. stocks are also trading higher today. recovering from yesterday's yields, joining us now is jim polson. jim, were you surprised that it was only a 12 hour of fair yesterday morning, and we are holding to the highest yields? strong upsidee price momentum here on the stock market.
it is probably going to take more than a temporary positive a single day. positiveuses -- such optimism, i think you are going to be seeing a lot of buying on the dips. i am more and more cautious on this market. high the strong price momentum is going to take it, it can certainly go higher, that is challenges forming for the stock market. we have the most positive investor optimism we have had in the entire recovery. and ill of worry is gone, think optimism is to bullish. we of course have rising yields, and it is not only in the 10 year, it is also in the five-year, two-year, cash rate. we have this happening with ultimately high valuations.
with strongs year and stout economic earnings, and we have to creeping inflation in the system. when you say inflation, are you talking about the u.s., or overseas markets? i think all markets. if the u.s. market correct's, i think all markets are going to come off a little bit. i think challenges are more pervasive to the u.s. market than overseas. they are not at full employment like we are here, their officials are still erring on the side of easing. they don't have as much inflationary evidence as we have building. there is greater risk in the united states market and i would hide out overseas. but i don't think there are going to escape if we don't have a correction this year.
>> what do you do and the united states? do you move, do you put more money into cash? >> i think there are several things. as much risket has here, and i think it is going to be higher yields that is going to bring stocks down. --ouple of things i would do i would move from the united states to the maximum amount you are allowed by your parameters. i wouldn't want to be hanging telecomtilities and that get hit pretty hard. we are switching from an economy led by consumer spending business spending. so technology, industrials, energy, i think are the areas you want to focus on. a lot of bills do well in the rising environment and rising
commodity prices, and inflation. i would look at adding direct commodity exposure. you could buy direct commodity etf, a little bit. you see commodity prices on the cusp of doing that, and we see the dollar close to a fresh three-year low. cash for the first time in this recovery has a return. case, willt been the be close to 2% before long, and having a little cash in the portfolio make sense. to 3%, i declined would put more into cash and move away from capital goods, and towards defensive sectors of the 10 year yield heads towards 3%. >> been calling in and to the yield market -- when can we expect it to be happening?
are movingyields right now, to some extent. year, the bond market is going to normalize that 10 year yield. more than an eyelash of a three-year high and it embedded market. as i said, the oil has gone to a three-year high. some point,hink at we are going to get a wage print at the first half of this year which breaches 3%. if we get a nominal economic number that is scary, i think the financial markets are poised to react to that in a more negative fashion. >> always great to have you. thank you. note, will have the fund manager joining us at 2:00 new york time, and 7:00
>> this is bloomberg markets. i am vonnie quinn. >> and i am shery ahn. renting in manhattan is getting a little less expensive. the city four years, is flooded with a large supply of new york apartments. we bring in jonathan miller, a real estate appraiser and consulting firm. prices, are they an effect
of the supply out there, or demanding less because of this new tax bill? >> it is early to factor in the tax law, and i think that will ultimately do -- favor the developers. we have an incredible volume of fordevelopment come in rental that far exceeds what we have seen in luxury condos. the problem is supply. that is why we see record concessions being set in at least three of the boroughs. >> housing changing from the last couple of years? a side note, we are still talking about the median rent of over $3000. >> exactly. the way to think of this is that rents are coming down from a .ery high level to a high level
in other words, you shouldn't look at this as a massive discount coming up. it is a slow grind. the supply coming into the market in terms of new development rental product is mostly skewed to the luxury or upper half of the market. it softer as you move up in rants, and essentially the supply is static, to be simplistic. in both markets, it is very polarized, and you see behavior differences. when you talk to somebody renting a studio, they wouldn't tell you that rents are softening. are we headed towards a corporate storm, for people started realizing that it is not
only about supply, but you have the new tax bill, and their mortgage deductions and property deductions?ion's >> what you might see, at least temporarily, the tax law overlaying -- for example the manhattan housing market is going to take two years for the buyers and sellers to have some type of price discovery. to find what the actual impact is. it is clear that the rents are going to be more challenged as you move up in price. sales.ts, youou move higher in price, are going to be impacted. activity,se in rental maybe not at the high-end, but at a market that is already soft
-- as buyers wait a year or two to see how things play out. you're going to have this. where you're going to see a pullback in activity until both buyers are comfortable. i am thinking westchester county, and how the real estate market is settling. implications -- what about other places in connecticut, new jersey? you lookk the way that at this is more about what the tax exposure is already, and will this lot really change things in terms of affordability? taxes isan markets, generally higher than in the city. of those places are at a disadvantage. and westchester, the average tax
is at $20,000. a $10,000 kith deduction for property tax in state and local. that is going to reduce buying power. i think the expectation of buyers is going to be a significant impact. has your advice changed to clients? maybe not to clients, but people asking for advice? >> i think what we are seeing insideow, in terms of advice on my part, it is more of an observation of a pullback in demand. are entering this. of wait and see -- we are entering this period of wait and see.
of that a lot discussion, as opposed to, oh my goodness, i am going to get things for free now. based on theiry property tax or their taxes exclusively. there is like, i live in new york, i worked in new york, i am not moving to mississippi. ofhink there is this sort hysteria over something that is not front and center in the buyers mind. signed a two-year contract on my apartment a few months ago, and now i am thinking, darn it. is my rent going to go up for another two years? answer is,k probably, because supply is still going to remain heavy. >> oh, good, thank you.
it is time now for the bloomberg business flash. some of the busiest -- biggest business stories. dropbox with a public offering in the u.s. jpmorgan has and valued at $10 million. highers forecasting airfares this year. the number two airline in the u.s. is expecting revenue to quarter.he first that will be the biggest gain in almost four years. slumped to its lowest after a south korean clampdown. the world's most active cryptocurrencies markets.
>> this is "bloomberg markets." i am vonnie quinn. >> and i am shery ahn. according to the dean of wall street lawyers, records policy comes as banks are helping investors fed in virtual currencies. what has been convinced? he believes the oversight council should record dating efforts to regulate bitcoin. the reason this is interesting they pute in december,
out a 150 page annual report, and bitcoin had one paragraph in it. , butdownplayed the risks the survey was based on 2015. as you know, cryptocurrency surged, and everything is way different. we talked about goldman sachs building a cryptocurrencies desk. also, isn't there a serious question mark in the upcoming year? is a fantastic question. yes, absolutely. of bitcoin andue cryptocurrency is that steve mnuchin has come out and said that we have to be monitoring illicit activity did between the coin and other transactions.
the federal reserve, the fcc, the cftc, and all of them here have had something to say whether it is about currency flows, money laundering, consumer protection. what type of strategy will authorities implement here? thinghink the biggest here is that it has to be fast. many banks have been hesitant, but they can't wait forever when their clients are asking for it. >> at what point is it become instantly needed? is there an amount of liquidity in bitcoin that causes to be necessary? is there a number of transactions of people who own bitcoin? i don't think anybody has set a threshold like that, i think the biggest indicator is the big players and it. hesitationw with the
of the banks, so many small players are getting involved with it. the question is how widespread is it going to get from there. >> if you are a bitcoin believer, will you sell? >> some people believe the opposite that regulation will legitimize the market. people are not familiar with the currency want a back to get into it, and the banks are not going to get into it unless the regulators are comfortable with it. >> what are the bank saying about regulation? have we had any big voices on the issue? >> there is a degree of frustration. a great example of this -- the a bigoney laundering is concern. as long as there's concern, there is no way people can enter it.
widespread adoption and widespread in trysts -- interest in the market requires guidelines. will they be a cryptocurrency rulebook? -- end ofhave seen from the last year to now how other cryptocurrencies have become more popular and have also been having to do with the same types of volatility. hereility is a big issue and another reason why banks are so hesitant. >> banks for joining today. coming up, bank earnings. this is bloomberg. ♪
we see u.s. stocks rebounding from the first losses. we are seeing energy leading the and add itsti up three-year high. the s&p 500 up. the highest on0 record, while the nasdaq is half a percent. tomorrow. of earnings onorgan releasing earnings friday. with first world news, here is mark crumpton. the trump administration issued guidance today on how states can require medicaid recipients to prove they are working, training for a job, or volunteering for their communities. say that can increase
the number of americans without health insurance. committee will vote on generate 17 on the nomination of jake powell to be fed chairman according to a spokesperson. he will succeed janet yellen. 5.l will warning on february studies that leaving the european union -- according to reports in cambridge, it could cost over a half-million jobs and lead to $60 billion in reduced investments by 2030. the british government has rejected a request from ecuador to julian assange. at an embassy in immunity.er seeking allowing him to leave the embassy.
global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. >> bank earnings are coming out tomorrow, with jpmorgan and wells fargo going first. overhaul, would affect the fourth quarter of 2017 and change estimates to 2018. joining us to discuss this is michael moore. are we going to see different line items, or more footnotes? >> i think you will see the bottom line results presented, and also adjusted earnings. some of these that -- tax changes, or taking on multimillion charges and foreign earnings that are now subject to taxes, and a take charge for that ar.
it is more of the outlook they are looking for. >> what are we expecting? >> you typically have some year and some costses being thrown in. goldman sachs will likely have higher compensation costs because they accelerate some previous rewards to try to get tax benefits from that. there are often one-time items so ie fourth quarter, think that is why the outlook for interest rates for loan of thein 2018 -- some commentary on that might drive the stoxx more than the figures themselves. graphic, and it will take some charges. i think citigroup, by far and away, the most, $20 billion. >> that is on the cfo's comments
last month. leftoverst is the from the financial crisis when they had breakdowns from their mortgage investments. some of that was left over, and are having to write that down. growth, what are we expecting on lending growth? people are expecting a little bit of a pickup from three to you -- 3q. people are just it on the consumer side. consumers get embedded in the last couple of years, and people are concerned with the credit quality, which has been historically great the last couple of years. so people will be looking at the provisions there. >> what is the first question analysts will ask on the calls? >> i think it will be on the tax
rate, going forward. and how much of that -- you heard jpmorgan talk about that last month -- how much of that will benefit the banks. as it will use some of these tax saving to become more competitive. now. had that graphic up >> talking about graphics, we have a graphic up on trading expected for 2017, but of course it has been hit because of volatility across all assets. are feeling like the third quarter -- there wasn't a lot of activity, there wasn't a lot of excitement. we are expecting in the mid teens for most banks. talking about britain and how half a million jobs might go,
that is terrifying. where did that number come from? >> the fear is that if you don't have a brexit deal when 2019 comes around, some companies, including the banks, the move people as a preemptive measure. the banks, throughout this process, talked about that we don't want to be stock by march of 2019. >> we have seen a real number. we have seen -- and start to wonder when are they going to make the real announcement? i guess this is it, 2019 is becoming the date. i think a lot of companies are starting to finalize their plans there and you will continues to see a trickle. it puts it into perspective. >> a lot of viewers are
wondering about bonuses. what are we expecting? >> it will depend on the revenue picture. what we have been estimating, and what some of the consultants have been looking for his trading bonuses to be down, and investment bankers to be slightly up. oft goes back to the lack volatility -- invested backing had a very good year. there was a decent amount of activity. these banks have gotten so giant, that it compensation pulls not only cover them, but a variety of other people, so it is hard to parse out what is happening to bonuses and just the compensation figures. culture.a different
positive this holiday season because they're are likely to return to double digits earnings growth faster than pretty slick anticipated. the turnaround plan is working. and has been a wild since this company has seen double digits in earnings. this is a great way to get a quick snapshot for a company with the financials. want to focus in on here on the earnings-per-share. we're looking at the current year -- returns of nearly 6% over the year. in 2016 there was a brief double-digit, but to find true double earnings growth, you will have to go back to 2010, 2011, 2012. they want to return to that previous. period. >> making headlines today, more retailers, walmart raising their minimum hourly rates -- wage to
$11. they actually raise their minimum wage of september of last year, so perhaps that was a bit of a influence. -- however, it was for it to catch up to walmart and attract talent. use g #btv. --want to catch up to target target wants to catch up to walmart. walmart doing very well, so the are starting to perhaps try to get closer to walmart there. have target upe 12% this year.
right now, flatlined, despite that positive news. abigail, 20 so much for that. -- thank you for that. uber developed a secret tool that allows them to locked down and foreign offices. joining us is olivia who helped break the story. olivia, this is quite something. they have been burned so many times before, and are taking active measures here. >> let me give you context on the program. in 2015, uber was starting the catch negative attention from believed that they
were engaging and tax evasion and skirting against loss for transportation agencies. authorities in various countries and cities would rate uber's offices abroad, so the company developed a program called ripley, that would remotely shutdown all computers in its offices when there was a raid, which was frustrating to these authorities. >> ripley, named after sigourney "alien" movies. where this lead? >> wilbur comes up these interesting names for its programs. it may be causing a bit of a pr issue. they had another program called god's view, where you could see
what writers are doing. in the future, maybe they will use more benign names for their programs. ien" was named after the "al movie. regardingpatchwork police warrants and rates, and everybody has different views on this. understand is that employees at the time and people working with and for uber felt that they were uncomfortable with the program, and we will have to see if it was indeed a legal. -- illegal. uberere was a statement by that they want to protect customer data when it comes to government regulations and request for data. of course, that could be disputed when it comes to the legality of it. who at uber knew of this and who designed it? it was originally designed by
the i.t. department and then transferred to the security department, where it was overseen by joe sullivan. was also overseen by legal, and the person who ran that program andally you -- sally yu, they did not request -- respond to a request for comment. to be fair to uber, i want to make sure their view of this is articulated. it is based on their rights to protect their information, especially because they have a lot of sensitive customer information. they havefeel that been targeted unfairly, abroad, because they feel that perhaps there is corruption among theygn government, and don't want leaks to competitors. so they want to protect it. >> there is a legal argument of
can protectle information, should they do that without asking me, and questions here -- how difficult is it to do? utopia where you have a red button and you lock everything down. are there other companies that might possibly develop these initiatives? >> we did ask around, and no company would say on the record. it is a very controversial topic. i think every company has security measures -- perhaps for a terrorist attack or unwanted who could the office steal information. i think what is remarkable about this program is the frequency that is used -- the way it was designed, and the intentions of the design and the fact that
uber has had a lot of issues with the law. it is it is that the company is facing five probes from the u.s. justice department, currently. >> olivia, if you so much for that. now it is time for the latest bloomberg business flash. >> apple could get up to $4 billion boost from the tax overhaul plan. whoould benefit companies do not follow the calendar year. offshore funds can translate to one last tax break. companies include apple, microsoft, and cisco. treasuries are in a bear market now. morgan stanley strategist said that don't worry, treasuries still offer value. it will be aays mild one.
-- inside chairs a gpt investment companies, equality for lesbian, gay, and transgender employees. begunx index provided trading today under the ticker. that is your latest bloomberg business flash. breaking news. nancy pelosi holding her conference right now, saying there is no point in a another stopgap bill without a backup deal -- daca deal. they initially agreed of a bipartisan meeting with president trump, now funding is running out on january 19, the nancy pelosi saying right now that there is no point in a stopgap bill without a daca
>> this is "bloomberg markets." i am shery ahn. >> and i am vonnie quinn. york street station is falling apart. suffering from the king equipments, and tools that are crumbling so how do such a critical transit hub to come a symbol of american infrastructure failure? joining us -- you what a fantastic piece in this week's bloomberg business weekend. we urge everybody to read it. penn station transports, to and
from, more than all of the airports in new york city combined, including jfk and laguardia. it is the busiest train station in the western hemisphere. america, butnot in the western hemisphere. it is handling -- this post a handle six and 50,000 people a day. it is dangerously overcrowded, and you have the tunnels underneath, dating back to 1910, it were seriously damaged in hurricane sandy, and are being eaten away by the chemicals from the seawater that came in. it is scary, it is dangerous, it is a mess. >> what is being done so far? buthere is lots of plants, each of them fell apart for some reason. some of it as funding, some of it is petty political bickering.
they wanted to share some of the cost with new york, new jersey, but the new president elected, he at some different views and his administration pulled out of the deal a couple of months ago, saying it was a local concern. for one week or another, including sandy, they just didn't happen. is there any chance of something getting started, some kind of new initiative getting started? >> it has to be a federal and local partnership. it is a lot of money. the tunnels alone, to fix the have twicehen they as many trains as coming in to new york. cost $13 billion. it does look like it was going to be happening anytime soon. >> every single day, there are delays.
the latest tweeted out today, trains going out of penn station are stuck in the open position near secaucus. we learned that this bridge was constructed more than a century ago. >> right, 1910. right, it is beautiful, but not very useful. everything, it is sped up to $29 billion. the longer we wait, the more expensive it gets. >> what happens if nothing gets done? >> the big concern is an extreme weather event, if the tunnels get flooded, there is a thin layer of sediment above the tunnels and there's a possibility they could collapse. even if they don't, one of those tubes will have to be taken out for service repairs. into twod a half or
>> there are the top stories we're watching at this hour. nafta in limbo. candidate for the u.s. to pull out of the agreement. prepare for a showdown. apple may get a boost from the tax overhaul. will review the details. today.. house voted we will get senator rand paul's take on the bill later this hour. ♪ shery: good progress. aretors across the aisle insisting a deal could come as soon as this week, even as negotiations seem to be at a stalemate.president trump is not backing down from his long promised border